Sky believes in better future after quarter in which rivals benefited from Euro 2016, Olympics and Paralympics

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Sky reported group revenue of £3.1bn, up five per cent on a like-for-like basis (Source: Getty)

William Turvill

Sky has said it is “on track financially” despite the company suffering at the expense of rivals broadcasting Euro 2016, the Olympics and the Paralympics.

The figures

In the UK and Ireland, turnover was up five per cent to to £2.1bn in the quarter to 30 September, boosted by a June TV price rise.

However, Sky said this was offset by “weakness in the UK television advertising market”, with revenue in this area down three per cent. It pointed towards rivals benefiting from Euro 2016 and the Paralympics.

The group as a whole reported revenue of £3.1bn, up five per cent on a like-for-like basis.

Sky said it had added 106,000 new customers during the quarter.

The company’s share price was flat this morning at 864p.

Why it's interesting

Reporting its results this morning, Sky said: “As expected, we had a quieter start to trading due to UEFA Euro 2016 and the summer Olympics, offset by a stronger September, meaning we go into our second quarter with good momentum.”

In today’s numbers, it is more about what Sky hasn’t said this morning, rather than what it has. While over 100,000 customer additions sounds impressive, Sky has kept the rate at which customers are leaving to itself this time.

After Sky’s recent price increase and with the trend of increasing customer churn already in place, this is maybe not surprising, especially with plenty of high quality sport on terrestrial TV this summer.

Bulls on the stock will point to 5 per cent like for like revenue growth in the first quarter, the opportunities in Germany, the recovery in Italy and tight cost control as all signs Sky is on track. We disagree: the very significant reduction in disclosure – and, while Sky flagged this ahead of time for its first quarter – is worrying. More fundamentally, the evidence seems to be mounting that the competitive and cost environments for Sky are getting tougher.

What Sky said

Group chief executive Jeremy Darroch:

We are on track financially in a year of investment on screen. We are bringing customers the very best TV with more of the biggest Premier League matches, Europe's best box set service and more new and exclusive original drama.

We are already seeing the benefit with good growth in revenues, more new customers joining us and existing customers consuming more. Alongside this we are making very strong progress on efficiency with operating costs for the quarter lower than a year ago in absolute terms.